<PAGE>
LETTER TO SHAREHOLDERS The Southern Africa Fund
================================================================================
January 28, 2000
Dear Shareholder:
We are pleased to provide the investment results and market commentary for The
Southern Africa Fund (the "Fund") for the annual reporting period ended November
30, 1999.
INVESTMENT RESULTS The following table provides investment results for the Fund
and its benchmark, the Johannesburg Stock Exchange ("JSE") All-Share Index, for
the three-, six- and 12-month periods ended November 30, 1999.
Your Fund outperformed its benchmark index over the three-, six- and 12-month
periods under review. The Fund's outperformance was a result of its focus on
growth stocks in the telecommunications, technology and media sectors of the
market. In our view, these issues have benefited from what we believe to be a
new perception among investors that the world is now
INVESTMENT RESULTS*
Periods Ended November 30, 1999
Total Returns
3 Months 6 Months 12 Months
-------- -------- ---------
The Southern
Africa Fund 13.44% 28.74% 43.15%
Johannesburg Stock
Exchange ("JSE")
All-Share Index 7.54% 18.71% 26.86%
* The Fund's investment results are total returns for the periods and are
based on the net asset value of the Fund's shares as of November 30, 1999.
All fees and expenses related to the operation of the Fund have been
deducted. Returns for the Fund include the reinvestment of any
distributions paid during the period. Past performance is no guarantee of
future results.
The Johannesburg Stock Exchange ("JSE") All-Share Index is a
capitalization-weighted index of 611 stocks traded on the Johannesburg
Stock Exchange. The index is unmanaged and reflects no fees or expenses. An
investor cannot invest directly in an index.
entering a new economic paradigm that will result in a period of sustained
global growth coupled with low inflation. This new paradigm coincides with a
significant change in the way individuals and corporations transact business as
a result of new technologies and the Internet.
MARKET COMMENTARY
South Africa's macroeconomic projections continue to improve, while growth
forecasts for both 1999 and 2000 continue to be upgraded. We believe that the
improvement in basic commodity prices, as a result of higher global growth, will
have major benefits for the South African economy, as South Africa remains
significantly represented in this sector. At the same time, interest rates in
South Africa have continued to decline. South Africa's new central bank governor
appears convinced that inflation remains under control. However, we have our
doubts. Core inflation (the inflation rate minus food, oil and mortgage interest
rates) remains high at around the 8% level. In our view, this is too high a
level from which to begin an economic recovery, particularly in a country that
in the past has shown great susceptibility to the link between growth and
inflation. As a result, in your Fund's portfolio we have begun to build a hedge
position to the U.S. dollar. At this point, approximately 8% of the Fund's
assets are hedged back into the U.S. dollar. We would anticipate increasing this
position if the relative cost of the hedge continues to decline due to U.S.
interest rates increasing and South African interest rates continuing to
decline.
PORTFOLIO OUTLOOK
Overall, the South African stock market appears attractive despite these
inflationary concerns. Valuations remain cheap and earnings momentum is picking
up rapidly on the back of economic recovery. The consumer has begun to regain
some confidence while manufacturing investment is beginning to
1
<PAGE>
The Southern Africa Fund
================================================================================
improve from a low base. As a result, we maintain your Fund in a fully invested
position but with a continued focus on growth stocks, despite significant recent
stock price increases in this area.
We have also been impressed by the relatively smooth transition of political
leadership in South Africa. Although significant problems remain, most notably
the high level of crime, unemployment and trade union power, Thabo Mbeki has
managed to hold the African National Congress together and show some progress
towards addressing these issues. We are optimistic that the political will to
confront many of South Africa's deep-rooted problems remains intact and that the
appreciation of a secure environment for business is high on the politicians'
agenda.
Thank you for your continued interest and participation in The Southern Africa
Fund. We look forward to reporting to you again on developments in the Southern
African markets and your Fund's investment results in coming periods.
Sincerely,
/s/ Dave H. Williams
Dave H. Williams
Chairman and President
/s/ Mark H. Breedon
Mark H. Breedon
Senior Vice President
2
<PAGE>
TEN LARGEST HOLDINGS
November 30, 1999 The Southern Africa Fund
================================================================================
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
COMPANY U.S.$ VALUE PERCENT OF NET ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
M-Cell, Ltd $ 5,347,193 6.6%
Billiton Plc 4,885,847 6.0
MIH Holdings, Ltd. 4,583,322 5.7
Anglo American Corp. of South Africa, Ltd. 4,497,126 5.6
Johnnies Industrial Corp., Ltd. 4,120,121 5.1
Standard Bank Investment Corp., Ltd. 3,928,085 4.9
Econet Wireless Holdings 3,564,875 4.4
Old Mutual Plc 3,251,888 4.0
Nedcor, Ltd. 3,213,809 4.0
Nasionale Pers Beperk, N Shares 3,128,342 3.9
Total $40,520,608 50.2%
- ----------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
November 30, 1999 The Southern Africa Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS--100.6%
BOTSWANA--1.9%
CONSUMER
MANUFACTURING--0.5%
MISCELLANEOUS--0.5%
Sefalana Holding
Company Ltd. .............. 350,000 $ 402,400
----------
CONSUMER STAPLES--0.5%
BEVERAGES--0.5%
Kgolo Ya Sechaba, Ltd. ...... 100,000 16,118
Sechaba Breweries, Ltd. ..... 398,000 436,204
----------
452,322
----------
FINANCIAL SERVICES--0.9 %
INSURANCE--0.9%
Botswana Insurance
Holdings, Ltd............... 227,298 708,272
----------
Total Botswanan Securities
(cost $1,077,927)............. 1,562,994
----------
KENYA--0.5%
CONSUMER STAPLES--0.5%
BEVERAGES--0.5%
East African Breweries, Ltd.
(cost $421,656)............ 452,623 424,713
----------
MALAWI--1.3%
CONSUMER SERVICES--1.3%
PRINTING & PUBLISHING--1.3%
Press Corporation (a)
(cost $2,002,638).......... 188,750 1,038,125
----------
MAURITIUS--1.5%
CONSUMER SERVICES--0.7%
RESTAURANTS & LODGING--0.7%
New Mauritius Hotels, Ltd. . 167,358 320,445
Rogers and Company, Ltd. ... 83,679 242,811
----------
563,256
----------
CONSUMER STAPLES--0.3%
BEVERAGES--0.3%
Mauritius Breweries, Ltd. ... 102,122 $ 274,153
----------
FINANCIAL SERVICES--0.5%
BANKING--0.5%
Mauritius Commercial Bank.... 100,000 365,180
----------
Total Mauritian Securities
(cost $1,154,737)............. 1,202,589
----------
NAMIBIA--1.6%
BASIC INDUSTRY--0.9%
MINING & METALS--0.9%
Namibian Minerals Corp. ..... 130,000 698,750
----------
CONSUMER STAPLES--0.7%
BEVERAGES--0.7%
Namibia Breweries, Ltd. .....1,000,000 569,661
----------
Total Namibian Securities
(cost $1,071,883)............. 1,268,411
----------
SOUTH AFRICA--86.8%(b)
BASIC INDUSTRIES--19.9%
CHEMICALS--2.9%
Sasol Limited................ 304,000 2,307,956
----------
GOLD--1.5%
Anglogold, Ltd. .............. 23,560 1,202,625
----------
MINING & METALS--10.4%
Anglo American Platinum ...... 83,100 2,491,249
Billiton Plc..................1,018,600 4,885,847
South African Iron
& Steel Industry Corp........ 317,558 1,049,778
----------
8,426,874
----------
MISCELLANEOUS--5.1%
Johnnies Industrial
Corp., Ltd. ................. 456,468 4,120,121
----------
16,057,576
----------
4
<PAGE>
The Southern Africa Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
CONSUMER SERVICES--16.1%
BROADCASTING & CABLE--5.7%
MIH Holdings, Ltd.............. 707,092 $ 4,583,322
-----------
PRINTING & PUBLISHING--3.9%
Nasionale Pers Beperk,
N shares....................... 351,000 3,128,342
-----------
RETAIL--GENERAL
MERCHANDISE--6.5%
New Clicks Holdings, Ltd....... 1,673,188 2,711,372
Pick `N Pay Stores, Ltd........ 1,721,220 2,582,806
-----------
5,294,178
-----------
13,005,842
-----------
CONSUMER STAPLES--5.9%
BEVERAGES--3.8%
South African
Breweries, Ltd................ 326,345 3,067,252
-----------
TOBACCO--2.1%
Rembrandt Group, Ltd............ 213,000 1,667,137
-----------
4,734,389
-----------
FINANCIAL SERVICES--20.6%
BANKING--17.1%
ABSA Group, Ltd................ 198,488 749,436
Firstrand Limited.............. 2,203,000 2,673,873
Nedcor, Ltd.................... 175,198 3,213,809
Old Mutual Plc................. 1,492,000 3,251,888
Standard Bank Investment
Corp., Ltd.................... 1,122,232 3,928,085
-----------
13,817,091
-----------
INSURANCE--1.9%
Alexander Forbes, Ltd........... 657,600 1,502,538
-----------
MISCELLANEOUS FINANCE--1.6%
Liberty Life Association
of Africa, Ltd................. 134,858 1,343,991
-----------
16,663,620
-----------
MULTI-INDUSTRY
COMPANIES--10.3%
African Lakes Corp. (c)........ 900,968 $ 1,168,841
Anglo American Corp.
of South Africa, Ltd. ........ 76,620 4,497,126
Compagnie Financiere
Richemont AG.................. 119,800 2,663,516
-----------
8,329,483
-----------
TECHNOLOGY--7.4%
COMPUTER SOFTWARE--7.4%
Dimension Data
Holdings, Ltd................. 579,084 3,002,867
Softline, Ltd.................. 2,165,000 2,968,060
-----------
5,970,927
-----------
UTILITY--6.6%
TELEPHONE UTILITY--6.6%
M-Cell, Ltd.................... 2,075,316 5,347,193
-----------
Total South African Securities
(cost $52,848,851)............ 70,109,030
-----------
ZAMBIA--1.0%
CONSUMER STAPLES--0.2%
BEVERAGES--0.2%
National Breweries Plc......... 2,000,000 136,122
-----------
FOOD--0.1%
Zambia Sugar Co., Ltd........... 30,720,000 116,806
-----------
TOBACCO--0.7%
Rothmans of Pall Mall-
(Zambia) Berhad................ 16,079,032 519,665
-----------
Total Zambian Securities
(cost $1,162,451).............. 772,593
-----------
ZIMBABWE--6.0%
CONSUMER STAPLES--1.6%
BEVERAGES--1.6%
Delta Corp., Ltd. ............. 4,015,139 1,262,953
-----------
5
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) The Southern Africa Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
CONSUMER SERVICES--4.4%
BROADCASTING & CABLE--4.4%
Econet Wireless
Holdings (b)..................... 20,000,000 $ 3,564,875
Total Zimbabwean Securities -----------
(cost $2,232,992)................. 4,827,828
-----------
TOTAL INVESTMENTS--100.6%
(cost $61,973,135)............... $81,206,283
Other assets less liabilities--(0.6%) (446,885)
-----------
NET ASSETS--100%......... $80,759,398
===========
- --------------------------------------------------------------------------------
(a) U.S. Dollar denominated security.
(b) These securities have been segregated to collateralize forward exchange
currency contracts.
(c) Non-income producing security.
See notes to financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999 The Southern Africa Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $61,973,135)........................ $81,206,283
Foreign cash, at value (cost $1,705,333)...................................... 1,700,995
Receivable for investment securities sold..................................... 676,776
Dividends receivable.......................................................... 95,225
-----------
Total assets.................................................................. 83,679,279
-----------
LIABILITIES
Payable for investment securities purchased................................... 2,184,402
Advisory fee payable.......................................................... 147,565
Tender fees payable........................................................... 135,090
Sub-advisory fee payable...................................................... 49,188
Net unrealized depreciation of forward exchange currency contract............. 22,032
Administrative fee payable.................................................... 12,646
Accrued expenses and other liabilities........................................ 368,958
-----------
Total liabilities............................................................. 2,919,881
-----------
NET ASSETS...................................................................... $80,759,398
===========
COMPOSITION OF NET ASSETS:
Common stock, at par.......................................................... $ 48,057
Additional paid-in capital.................................................... 65,372,141
Distribution in excess of net investment income............................... (91,505)
Accumulated net realized losses on investments and
transactions................................................................. (3,784,890)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities.................................. 19,215,595
-----------
$80,759,398
===========
NET ASSET VALUE PER SHARE (based on 4,805,680 shares outstanding)............... $16.80
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1999 The Southern Africa Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $41,761)............ $2,092,786
Interest........................................................ 92,698 $ 2,185,484
-----------
EXPENSES
Management fee.................................................. 596,596
Audit and legal................................................. 343,413
Sub-advisory fee................................................ 199,189
Custodian....................................................... 185,691
Directors' fees and expenses.................................... 174,357
Administrative fee.............................................. 153,979
Reports and notices to shareholders............................. 66,993
Transfer agency................................................. 13,324
Amortization of organization expenses........................... 3,152
Registration.................................................... 1,550
Miscellaneous................................................... 25,314
-----------
Total expenses.................................................. 1,763,558
-----------
Net investment income........................................... 421,926
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions.................... (3,627,949)
Net realized loss on foreign currency transactions.............. (31,083)
Net change in unrealized appreciation/depreciation of:
Investments.................................................... 30,363,470
Foreign currency denominated assets and liabilities............ (13,790)
-----------
Net gain on investments and foreign currency transactions....... 26,690,648
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS....................... $27,112,574
===========
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS The Southern Africa Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income........................................................ $ 421,926 $ 892,421
Net realized gain (loss) on investments and foreign currency transactions.... (3,659,032) 400,146
Net change in unrealized appreciation (depreciation) of investments
and foreign currency denominated assets and liabilities..................... 30,349,680 (24,121,657)
------------ ------------
Net increase (decrease) in net assets from operations........................ 27,112,574 (22,829,090)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................................................ (310,672) (892,421)
Distributions in excess of net investment income............................. -0- (1,624,554)
Net realized gains........................................................... -0- (15,558,389)
Distribution in excess of net realized gains................................. (1,828,878) -0-
Tax return of capital........................................................ (161,170) -0-
COMMON STOCK TRANSACTIONS
Tender offer (resulting in the redemption of 1,201,420 shares
of its common stock)........................................................ (17,180,306) -0-
Tender offer costs........................................................... (149,637) -0-
------------ ------------
Total increase (decrease).................................................... 7,481,911 (40,904,454)
NET ASSETS:
Beginning of year............................................................ 73,277,487 114,181,941
------------ ------------
End of year.................................................................. $80,759,398 $ 73,277,487
=========== ============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1999 The Southern Africa Fund
================================================================================
NOTE A: Significant Accounting Policies
The Southern Africa Fund, Inc. (the "Fund") was incorporated under the laws of
the State of Maryland on March 25, 1993 and is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The Fund commenced operations on March 7, 1994. The financial
statements have been prepared in conformity with generally accepted accounting
principles, which require management to make certain estimates and assumptions
that affect the reported amounts of asset and liabilities in the financial
statements and amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies of the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices on that day. Readily marketable securities
traded in over-the-counter market, securities listed on a foreign securities
exchange whose operations are similar to the U.S. over-the-counter market, and
securities listed on a national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the current bid and
asked prices. U.S. government and fixed income securities which mature in 60
days or less are valued at amortized cost, unless this method does not represent
fair value. Securities for which current market quotations are not readily
available are valued at their fair value as determined in good faith by, or in
accordance with procedures adopted by, the Fund's Board of Directors. Fixed
income securities may be valued on the basis of prices obtained from a pricing
service when such prices are believed to reflect the fair market value of such
securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued. Net realized gains or losses on foreign currency
transactions represents foreign exchange gains and losses from sales and
maturities of foreign fixed-income investments and closed forward exchange
currency contracts, holdings of foreign currencies, currency gains and losses
realized between the trade and settlement dates on foreign investment
transactions and the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net currency gains and
losses from valuing foreign currency denominated assets and liabilities at
period end exchange rates are reflected as a component of net unrealized
appreciation of investments and foreign currency denominated assets and
liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. Withholding taxes on foreign interest and dividends have been provided
for in accordance with the applicable tax requirements.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the date the securities are purchased or sold.
Investment gains and losses are determined on the identified cost basis. The
Fund accretes discounts on short-term securities as adjustments to interest
income.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Distributions in excess of net realized capital gains are due primarily to
differing tax treatments for post-October losses. Income and capital gains
distributions are determined
10
<PAGE>
The Southern Africa Fund
================================================================================
in accordance with federal tax regulations and may differ from those determined
in accordance with generally accepted accounting principles. To the extent these
differences are permanent, suchamounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification. During the current fiscal year, permanent
differences, primarily due to tax classification of distribution and tax return
of capital, resulted in a net decrease in Distribution in excess of net
investment income and additional paid-in capital and a corresponding decrease in
accumulated net realized loss. This reclassification had no effect on net
assets.
- --------------------------------------------------------------------------------
NOTE B: Management, Sub-advisory and
Administrative fees
Under the terms of the Investment Management Agreement, amended as of May 1,
1998, the Fund pays Alliance Capital Management L.P. (the "Investment Manager")
a fee calculated and paid quarterly, based on either (i) .81% of the Fund's
average weekly net assets if 90% or less of the Fund's average weekly net assets
are invested in securities of South African issuers, or (ii) the sum of (a) .80%
of the Fund's average weekly net assets and (b) .10% of the Fund's average
weekly net assets not invested in securities of South African issuers if greater
than 90% of the Fund's average weekly net assets are invested in securities of
South African issuers.
Under the terms of the Sub-Advisory Agreement, effective May 31, 1998, the Fund
pays Gensec Asset Management (PTY) a fee calculated and paid quarterly equal to
an annualized rate of .30 of 1% of the greater of (i) the Fund's average weekly
net assets invested in securities of South African issuers or (ii) 90% of the
Fund's average weekly net assets during the quarter.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Manager, the Fund
reimburses AFS for costs relating to servicing phone inquires for the Fund.
There were no reimbursements from the Fund to AFS during the year ended November
30, 1999 relating to shareholder servicing costs.
Under the terms of an Administrative Agreement, the Fund pays Princeton
Administrators, L.P. (the "Administrator") a monthly fee equal to the annualized
rate of .20 of 1% of the Fund's average adjusted weekly net assets subject to an
annual minimum of $150,000. The Administrator prepares certain financial and
regulatory reports for the Fund and provides clerical and other services.
- --------------------------------------------------------------------------------
NOTE C: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $39,424,193 and $55,116,247,
respectively, for the year ended November 30, 1999. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
November 30, 1999.
At November 30, 1999, the cost of investments for federal income tax purposes
was $62,494,917. Accordingly, gross unrealized appreciation of investments was
$21,291,417 and gross unrealized depreciation of investments was $2,580,051
resulting in net unrealized appreciation of $18,711,366 (excluding foreign
currency transactions).
At November 30 1999, the Fund had a capital loss carryforward of 3,376,645 which
will expire in 2007.
Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio holdings,
to hedge certain firm purchase and sales commitments denominated in foreign
currencies and for investment purposes. A forward exchange currency contract is
a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the original contracts and the closing of such contracts is included in net
realized gains or losses on foreign currency transactions.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) The Southern Africa Fund
================================================================================
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or other liquid assets in a separate account of the Fund having a value at least
equal to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risk may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of foreign
currencies relative to the U.S. dollar.
At November 30, 1999, the Fund had outstanding forward exchange currency
contracts, as follows:
<TABLE>
<CAPTION>
U.S.$
Contract Value on U.S.$
Amount Origination Current Unrealized
(000) Date Value Depreciation
----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Forward Exchange Currency
- -------------------------
Sale Contract
- -------------
South African Rand
Settling 1/26/2000. . . . . . . . . . . . . . . 43,162 $6,972,296 $6,994,328 $(22,032)
</TABLE>
- --------------------------------------------------------------------------------
NOTE D: Capital Stock
There are 100,000,000 shares of $.01 par value capital stock authorized. On June
24, 1999, the Fund purchased and retired 1,201,420 shares of its outstanding
common stock for $14.30 per share pursuant to a tender offer. The Fund incurred
tender offer costs of $149,637 which were charged to additional paid-in capital.
Of the 4,805,680 shares of Common Stock outstanding at November 30, 1999, the
Investment Manager owned 7,100 shares.
- --------------------------------------------------------------------------------
NOTE E: Concentration of Risk
Investment in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of comparable U.S. companies.
12
<PAGE>
FINANCIAL HIGHLIGHTS The Southern Africa Fund
================================================================================
Selected Data For A Share Of Common Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
Year Ended November 30,
-------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........................ $ 12.20 $ 19.01 $ 20.08 $ 21.49 $ 18.34
-------- -------- -------- -------- --------
Income From Investment Operations
- ---------------------------------
Net investment income..................................... .08(a) .16 .41 .39 .17
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions............................................. 4.90 (3.96) 1.10 (.30) 4.27
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value
from operations.......................................... 4.98 (3.80) 1.51 .09 4.44
-------- -------- -------- -------- --------
Less: Dividends and Distributions
- ---------------------------------
Dividends from net investment income...................... (.05) (.15) (.34) (.59) (.52)
Distributions in excess of
net investment income.................................... -0- (.27) -0- -0- -0-
Distribution from net realized gains
on investments and foreign currency
transactions............................................. -0- (2.59) (2.24) (.91) (.77)
Distribution in excess of net realized
gains on investments and foreign currency
transactions............................................. (.30) -0- -0- -0- -0-
Tax return of capital..................................... (.03) -0- -0- -0- -0-
-------- -------- -------- -------- --------
Total dividends and distributions......................... (.38) (3.01) (2.58) (1.50) (1.29)
-------- -------- -------- -------- --------
Net asset value, end of year.............................. $ 16.80 $ 12.20 $ 19.01 $ 20.08 $ 21.49
======== ======== ======== ======== ========
Market value, end of year................................. $13.3125 $10.0625 $15.375 $ 16.50 $16.75
======== ======== ======== ======== ========
Total Return
- ------------
Total investment return based on: (b)
Market value.............................................. 37.53% (18.11)% 9.28% 6.12% 22.90%
Net asset value........................................... 43.15% (19.70)% 11.03% .66% 27.89%
Ratios/Supplemental Data
- ------------------------
Net assets, end of year (000's omitted)................... $80,759 $73,277 $114,182 $120,612 $129,112
Ratio of expenses to average net assets................... 2.39% 2.10% 2.05% 2.04% 2.05%
Ratio of net investment income
to average net assets.................................... .57% .95% 2.00% 1.87% .94%
Portfolio turnover rate................................... 55% 86% 46% 62% 41%
</TABLE>
- --------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming a purchase of common
stock on the opening of the first day and a sale on the closing of the last
day of the year reported. Dividends and distributions, if any, are assumed
for purposes of this calculation, to be reinvested at prices obtained under
the Fund's dividend reinvestment plan. Generally, total investment return
based on net asset value will be higher than total investment return based
on market value in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total investment return
based on net asset value will be lower than total investment return based
on market value in periods where there is a decrease in the discount or an
increase in the premium of the market value to the net asset value from the
beginning to the end of such year.
13
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS The Southern Africa Fund
================================================================================
To the Shareholders and Board of Directors
The Southern Africa Fund, Inc.
We have audited the accompanying statement of assets and liabilities of The
Southern Africa Fund, Inc. (the "Fund"), including the portfolio of investments,
as of November 30, 1999, and the related statements of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosure in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of November 30, 1999, by correspondence with
the custodian and others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Southern Africa Fund, Inc. at November 30, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the indicated
periods, in conformity with accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
New York, New York
January 14, 2000
- --------------------------------------------------------------------------------
Tax Information (Unaudited)
In order to meet certain requirements of the Internal Revenue Code, we are
advising you that the fund made capital gain distributions of $1,828,878 during
the fiscal year ended November 30, 1999 which are subject to a maximum tax rate
20%. Shareholders should not use the above information to prepare their tax
returns. The information necessary to complete your income tax returns will be
included with your Form 1099 DIV which will be sent to you separately in January
2000.
14
<PAGE>
ADDITIONAL INFORMATION The Southern Africa Fund
================================================================================
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment Plan (the "Plan"), pursuant to which
dividends and capital gain distributions to shareholders will be reinvested in
additional shares of the Fund. The Bank of New York (the "Agent") will act as
agent for participants under the Plan. Shareholders whose shares are held in the
name of a broker or nominee should contact such broker or nominee to determine
whether or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue
new shares at the greater of net asset value of 95% of the then current
market price.
(ii)If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or
elsewhere, for the participants' accounts. Such purchases will be made on
or shortly after the payment date for such dividend or distribution and in
no event more than 30 days after such date except where temporary
curtailment or suspension of purchase is necessary to comply with Federal
securities laws. If, before the Agent has completed its purchases, the
market price exceeds the net asset value of a share of Common Stock, the
average purchase price per share paid by the Agent may exceed the net asset
value of the Fund's shares of Common Stock, resulting in the acquisition of
fewer share than if the dividend or distribution had been paid in shares
issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all Transactions in the account, including information
needed by shareholders for tax records. Share in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of the
participant, and each shareholders' proxy will include those shares purchased or
received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's account will be the average cost,
including brokerage commissions, of any shares purchased in the open market plus
the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payble (or required to be withheld)
on dividends and distributions.
Experience under the Plan may indicate that change are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to participants in the Plan at least 90 days
before the record date for such dividend or distribution. The Plan may also be
amended or terminated by the Agent on at least 90 days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at The Bank of New York, 101 Barclay Street, New York, New
York 10286.
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or bylaws that would delay or prevent a change of
control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv)
15
<PAGE>
ADDITIONAL INFORMATION (continued) The Southern Africa Fund
================================================================================
no change in the person primarily responsible for the day-to-day management of
the Fund's portfolio, who is Mark H. Breedon, a Senior Vice President of the
Fund.
Year 2000 (unaudited)
With respect to the Year 2000 issue, the Fund has been advised by Alliance and
by its major service providers that there is no indication that they have had or
will experience significant system interruptions.
16
<PAGE>
The Southern Africa Fund
================================================================================
BOARD OF DIRECTORS
Dave H. Williams, Chairman and President Ronnie Masson
T.N. Chapman (1) Sam N. Montsi (1)
Prof. Dennis Davis (1) Johannes C. van Reenen
David D.T. Hatendi (1) Frank Savage
Dr. Willem de Klerk (1) Dr. Reba W. Williams
Moss L. Leoka Peter G.A. Wrighton (1)
Wendy N. Luhabe
OFFICERS
Norman S. Bergel, Senior Vice President Edmund P. Bergan, Jr., Secretary
Mark H. Breedon, Senior Vice President Mark D. Gersten, Treasurer &
Russell Brody, Vice President Chief Financial Officer
Vincent S. Noto, Controller
ADMINISTRATOR INDEPENDENT AUDITORS
Princeton Administrators, L.P. Ernst & Young LLP
P.O. Box 9095 787 Seventh Avenue
Princeton, NJ 08543-9095 New York, NY 10019
CUSTODIAN DIVIDEND PAYING AGENT,
Brown Brothers Harriman & Co. TRANSFER AGENT AND REGISTRAR
40 Water Street The Bank of New York
Boston, MA 02109 101 Barclay Street
New York, NY 10286
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee.
Notice is hereby given in accordance with Section 23 (c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report, including the financial statements herein, is transmitted to the
shareholders of The Southern Africa Fund for their information. The financial
information included herein is taken from the records of the Fund. This is not a
prospectus, circular or representation intended for use in the purchases of
shares of the Fund or any securities mentioned in this report.
17
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18
<PAGE>
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19
<PAGE>
The Southern Africa Fund
Summary of General Information
Investment Policies and Objectives
The investment objective of the Fund is to seek long-term capital appreciation
through investment in equity and fixed income securities of Southern African
issuers.
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 432-8224. The Fund also distributes its daily
net asset value to various financial publications or independent organizations
such as Lipper Inc., Morningstar, Inc. and Bloomberg.
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers. The Fund's NYSE trading
symbol is "SOA". Weekly comparative net asset value (NAV) and market price
information about the Fund is published each Monday in The Wall Street Journal
and each Sunday in The New York Times and other newspapers in a table called
"Closed-End Funds".
Dividend Reinvestment Plan
A Dividend Reinvestment Plan provides automatic reinvestment of dividends and
capital gains distributions in additional Fund shares.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call The Bank of New
York at (800) 432-8224.
The Southern Africa Fund
1345 Avenue of the Americas
New York, New York 10105
AllianceCapital[LOGO](R)
(R)These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SAFAR1199
THE
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SOUTHERN AFRICA
---------------
FUND
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[GRAPHIC]
Annual Report
November 30, 1999
AllianceCapital[LOGO](R)
